01:35
Faizan
Within ten minutes of entering the business and speaking with the manager I knew that finding the right buyer would be essential if I were to stand a chance of not only selling this business but at getting the best price my client.
The premises were very shabby however the core business was extremely impressive, had masses of potential with huge barriers to entry due to the costs associated with buying new specialised equipment, obtaining suitable laboratory space, training staff in the use of instrumentation, obtaining accreditation's and gaining the relevant licenses not to mention the time taken to gain the client loyalty and even then, having the right driver behind the wheel would be critical to its future.
Each meeting, phone conversation, email with the vendor was difficult as he was suffering from mild memory loss due to his old age and couldn't remember a lot of what we had discussed previously so my battle with him was very uphill. I knew that I also had to look out for his interests when negotiating a sale and I made sure that every conversation between me, the vendor and the purchaser was well documented.
Everything that you should not do when trying to sell a business, he did. He increased staff wages as he thought it would the right thing to do for them moving forward, he purchased new equipment, he spent money on updating the computer and phone system, he took on new staff, all of which either reduced the net profit or was expected by a purchaser to be included in the sale price with no extra investment.
The owner had established the business over 18 years previously and had got it to a stage where he was finding it hard to move forward at a pace that it should have been worthy of. Each year turnover and profits had been increasing but the business and staff were in a constant struggle with their work load due to the severe lack of management, systems and procedures and even simple direction. This was a business that was seriously performing under its potential.
Once the appraisal had been finalised and all had been agreed on between me and the vendor, it was time to do my homework on the potential purchasers. It was quite apparent that this business was not run of the mill and most potential buyers would have absolutely no interest whatsoever, so I had to be very specific when seeking a buyer. I made contact with a select few companies, all based interstate or overseas as there are no other competitors here in WA to speak of.. I managed to get two companies who were extremely interested in buying out this business as they saw the huge potential that it held for them. The staff were all qualified and all wished to stay on after a sale occurred, the substantial amount of plant and equipment was all in good working order, some of which was brand new and the work just kept rolling in without much effort at all.
There was hurdle after hurdle, the vendor did not understand the importance of providing me with the information I needed to help me get this deal across the line, and it was a constant uphill battle!
The premises were very shabby however the core business was extremely impressive, had masses of potential with huge barriers to entry due to the costs associated with buying new specialised equipment, obtaining suitable laboratory space, training staff in the use of instrumentation, obtaining accreditation's and gaining the relevant licenses not to mention the time taken to gain the client loyalty and even then, having the right driver behind the wheel would be critical to its future.
Each meeting, phone conversation, email with the vendor was difficult as he was suffering from mild memory loss due to his old age and couldn't remember a lot of what we had discussed previously so my battle with him was very uphill. I knew that I also had to look out for his interests when negotiating a sale and I made sure that every conversation between me, the vendor and the purchaser was well documented.
Everything that you should not do when trying to sell a business, he did. He increased staff wages as he thought it would the right thing to do for them moving forward, he purchased new equipment, he spent money on updating the computer and phone system, he took on new staff, all of which either reduced the net profit or was expected by a purchaser to be included in the sale price with no extra investment.
The owner had established the business over 18 years previously and had got it to a stage where he was finding it hard to move forward at a pace that it should have been worthy of. Each year turnover and profits had been increasing but the business and staff were in a constant struggle with their work load due to the severe lack of management, systems and procedures and even simple direction. This was a business that was seriously performing under its potential.
Once the appraisal had been finalised and all had been agreed on between me and the vendor, it was time to do my homework on the potential purchasers. It was quite apparent that this business was not run of the mill and most potential buyers would have absolutely no interest whatsoever, so I had to be very specific when seeking a buyer. I made contact with a select few companies, all based interstate or overseas as there are no other competitors here in WA to speak of.. I managed to get two companies who were extremely interested in buying out this business as they saw the huge potential that it held for them. The staff were all qualified and all wished to stay on after a sale occurred, the substantial amount of plant and equipment was all in good working order, some of which was brand new and the work just kept rolling in without much effort at all.
There was hurdle after hurdle, the vendor did not understand the importance of providing me with the information I needed to help me get this deal across the line, and it was a constant uphill battle!
Posted in: business
